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Ethereum’s post-Merge supply remains tight, with just ~300,000 new ETH issued since 2022 as demand climbs.
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Companies like BitDigital and SharpLink Gaming now absorb most of this new supply, boosting institutional accumulation.
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Critics argue ETH’s narrative has weakened, with stablecoins dominating demand as rival blockchains emerge.
Ethereum’s supply constraints post-Merge fuel institutional demand, but critics warn stablecoins and competition challenge ETH’s dominance.
Why Institutions Soon Buy up All Newly Issued ETH
Since Ethereum’s Merge upgrade in September 2022, the network has sharply reduced ETH issuance. Ycharts data shows that issuers only circulated around 300,000 new ETH after this upgrade.
Furthermore, Ethereum burns a portion of transaction fees forever, and validators must lock up large amounts of ETH to secure the network. Companies and institutions ramping up ETH accumulation in 2025 could further push the supply-demand imbalance.
Ethereum developer Binji compared ETH to an oil field that pumps out just one barrel daily, while Wall Street consumes six barrels. His point is that new ETH issuance is tiny compared to what institutions keep buying and holding.
“SharpLink Gaming and BitDigital have, in just one month, eaten up 82% of all the net new ETH issued since the Merge (298,770). Plus, spot ETFs hold 4.11 million ETH, which is 11x the net issuance. Basically, imagine an oil mine that yields one barrel a day while Wall Street swallows six,” Binji explained.
COINOTAG reported that Bit Digital sold all its Bitcoin holdings — 280 BTC worth around $28 million—and combined the proceeds with the $172 million raised through a public offering to buy 100,603 ETH worth about $254.8 million. Earlier, SharpLink Gaming raised $425 million specifically to buy more Ethereum.
These moves led well-known crypto analyst Pentoshi to predict that institutions will soon absorb all newly issued ETH.
“In less than one month, public companies will have bought enough ETH to offset all the ETH that’s been created since the Merge,” Pentoshi predicted.
Pentoshi and Binji both argue that ETH accumulation is still early. They believe ETH could transform into a mainstream deflationary asset.
However, some critics challenge this view. They argue that companies might hold ETH in their treasuries mainly to attract “exit liquidity” — so large investors can sell at higher prices.
These critics claim narratives that once fueled ETH’s price — like ICOs, DeFi, and NFTs — have lost strength. They say stablecoins now drive ETH demand. However, Ethereum could lose its leading position as more blockchains compete to host stablecoins.
“All ETH has for a narrative today is stablecoins. But do we really need a $300 billion decentralized blockchain just to trade IOUs? No. Many stablecoin chains will launch to compete with ETH. As for the ETH treasury companies, that’s just to attract exit liquidity,” investor John Galt said.
At the time of writing, ETH trades around $2,550. ETH’s price is still half of its all-time high from 2021.
Institutional Demand and Market Dynamics
The surge in institutional interest reflects a broader trend of crypto assets gaining legitimacy among traditional investors. Firms like BitDigital and SharpLink Gaming are not only accumulating ETH but also signaling confidence in Ethereum’s long-term potential as a store of value and platform for decentralized applications.
This institutional appetite could tighten supply further, potentially supporting price stability or appreciation. However, the market remains sensitive to macroeconomic factors and regulatory developments that could influence investor sentiment.
Challenges to Ethereum’s Dominance Amid Rising Competition
Despite strong institutional backing, Ethereum faces increasing competition from alternative blockchains offering lower fees and faster transaction speeds. Networks such as Solana, Avalanche, and Binance Smart Chain are aggressively courting stablecoin issuers and decentralized finance (DeFi) projects, which historically have been Ethereum’s core strengths.
Critics highlight that Ethereum’s reliance on stablecoins as a primary demand driver may limit its growth if these assets migrate to competing chains. This dynamic underscores the importance of Ethereum’s ongoing scalability upgrades and ecosystem development to maintain its market position.
Conclusion
Ethereum’s post-Merge supply reduction combined with rising institutional accumulation creates a unique supply-demand dynamic that could redefine ETH’s market narrative. While companies like BitDigital and SharpLink Gaming are driving significant demand, skepticism remains regarding Ethereum’s long-term dominance amid stablecoin-driven demand and emerging blockchain competitors. Investors should monitor these evolving factors carefully as Ethereum navigates its next phase of growth.
